Trading Gaps

I am not advertizing anything.

I'm just discussing a trading system and obviously referring to it.

THAT's what the whole site is about.

It' s certainly NOT about what some fellas here are doing: insulting and attacking.

so from now on I won' t even reply anymore to unqualified aggressive nay-sayers. have all the fun yelling and howling into a tornado!
 
Quote from milimabuse:

I am not advertizing anything.

Quote from milimabuse:

Okay, here' s a BIG truth you'll almost never hear about trading:

99.999% of systems DON'T work!
Here' s why:

Forget all technical indicators - MA, MACD, RSI..etc etc..

the market can ALWAYS get more oversold when you thought you' re buying at oversold, and if you happen to be a channel breakout buyer, well it can crush you and take out all your stops the next minute.

It CANNOT work, because a stock can ONLY go UP or DOWN, it' s like Roulette red/black with the ONLY advantage being that you don' t lose when the table hits 0 'cause that' s when the stock doesn' t move...

So no indicator in the world can predict the market. it all comes out to luck in the end if you use indicators:
you could have a "winning series" where your Elliott waves work perfectly, you make 50% in 3 months, and think you' re the King of the World..just to get cocky enough to languidly stumble into a dull range or even worse a "back to beginning" bear phase, where all your "dip-buying" eats your profits...


don' t we all know this? haven# t we all been there..?

so why do 99% of traders still look for the holy indicator grail..

forget it!

There are 2 things that work.
Here' s one. I know the fella who invented and traded this at a major firm and made real dough!




Read carefully, and figure yourself how LOGICAL this is!
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LOOKS LIKE AN ADVERTISEMENT TO ME................................
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Quote from milimabuse:

you guys just don't understand:
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What you don't understand is that one or two really bad trades like this can wipe you out. The greatest danger is you have 30 or 40 or 50 successful gap trades and you decide it's like taking candy from a baby, so all of a sudden the opportunity of a lifetime presents itself.

July 30, 2008 ELN gaps down 12.00 a share and ends the day down $2 more. The following day it falls a bit further, establishes support, and attracts buyers. You put on a large long position when it rose above the previous day's closing price and excitedly await at least a few more dollars of retracement of that massive gap. You've had so many of these winners in a row that it's like shooting fish in a barrel!

August 1, you awake to another gap down of nearly $10 a share. If you have enough capital to hold the position the best recovery you ever get is a $5/share loss.

Overnight positions carry very high risk compared to day trading, unless you hedge your position.

As for needing NO STOPS, how would that have affected a nice profitable MTXX long position a trader was carrying on June 16th when it dropped from 19.22 to 5.48 intraday on bad news?

Best of trading to you, may you never encounter one of these events and if you do, may it happen on a day you decided to wear your seat belt.
 
I am not advertizing anything.

I'm just discussing a trading system and obviously referring to it.

THAT's what the whole site is about.

It' s certainly NOT about what some fellas here are doing: insulting and attacking.

so from now on I won' t even reply anymore to unqualified aggressive nay-sayers. have all the fun yelling and howling into a tornado!
 
nodoji,

no, it can' t wipe you out!

you have 10 dfferent stocks from different sectors. so even if 1-2 break -30-50% at next day' s open, you don' t go break.

AND you have the equal chance of a stock gapping UP +30-50% on better than expected earnings..or...a TAKEOVER!!!

and obviously that' s one important element
 
Quote from NoDoji:

What you don't understand is that one or two really bad trades like this can wipe you out.
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If this would be the case the trader obviously didnt get his homework on risk management done, NoDoji.
 
Why don't you simply enter the trade when the market opens, after the gap has taken place overnight. Fading the gap opening market strategy is one of the more successful and simple ways to trade the market. I believe that's the essence of Don Bright's Opening Order Journal & strategy, as it put you on the same side as the Specialists....

I'm not sure how well a "fading the Gap" aligns with what this OP is suggesting; however, FWIW - I would defer to Don on fading the gap type market opening strategy.


Walt
 
Quote from saico:

If this would be the case the trader obviously didnt get his homework on risk management done, NoDoji.
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saico, one of the most dangerous things that can happen to a trader is incredible success with a strategy or in a specific market. A trader learns a gap strategy and it works like an ATM machine. The trader has nothing to compel him/her to be concerned with risk management because it's worked 30 times in a row! A "too good to be true" setup like ELN happens and the trader's "all in". That's the one trade that wipes out the account.

You can do all the homework in the world on risk management, but if a large string of trading successes makes you the least bit careless, you are ripe for ruin.
 
Quote from jones247:

Why don't you simply enter the trade when the market opens, after the gap has taken place overnight. Fading the gap opening market strategy is one of the more successful and simple ways to trade the market. I believe that's the essence of Don Bright's Opening Order Journal & strategy, as it put you on the same side as the Specialists....

I'm not sure how well a "fading the Gap" aligns with what this OP is suggesting; however, FWIW - I would defer to Don on fading the gap type market opening strategy.


Walt
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How do you determine whether to fade or follow a gap?

For example I've seen large gaps up crash from opening bell, and I've seen large gaps up skyrocket and never even pull back half of the continuation move from the open, taking out faders with major slippage, or leaving them in a bad "hold & hope" position if they had no risk management to start with.
 
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